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Is the Governor Listening to the Aerospace Industry?

At the Governor’s Aerospace Summit earlier this month, Governor Inslee outlined how he plans to entice Boeing to keep building planes in Washington.

Extending a series of tax breaks and expediting permitting for the aerospace giant are the centerpiece of his strategy.

Receiving considerably less attention from the Governor are two issues Boeing has identified as serious obstacles to doing business in Washington—our state’s costly workers’ compensation system and the stringent new water quality regulations under consideration by the Department of Ecology (DOE). The former has long been a complaint of Boeing. The latter is a newer battle that has become Boeing’s top policy priority.

DOE is proposing water quality rules that would be the harshest in the nation. In fact, the rules are so tight DOE admits they are impossible to measure or meet with today’s technology. The battle is over how clean the water discharged from municipal wastewater treatment plants and industrial activity must be before reaching waterways. Adoption of the proposed new rules could mean significantly higher costs for Boeing’s Renton plant on Lake Washington.

An official for the Aerospace Futures Alliance, which hosted the Summit, says the state must reform workers’ compensation and resolve the water regulation issue (among other problems), warning failure to do so will result in an “arms race” with other states for aerospace businesses. A recent report reveals Washington’s aerospace industry employs 132,500 people, supported $76 billion in sales and accounted for 11% of gross business income in the state last year.

The CEO of one aerospace company warned Summit attendees that "every single region of the country is knocking on our doors" and toldThe Seattle Times:

“These states want what we have and they are going after it aggressively in ways we can’t do. It’s all about jobs.”

Yet, in his remarks at the Aerospace Summit, the Governor was largely unresponsive to Boeing’s and the rest of the business community’s concerns with workers’ compensation costs, instead declaring Washington’s workers’ compensation system is among the most competitive and low cost in the nation. The business community has complained for years our state’s monopoly system is a major cost driver in their business. Workers’ comp taxes have increased 66% since 2000 and another 40% increase is planned over the next ten years. Meanwhile, Oregon employers have enjoyed a 14% decrease in workers’ comp rates and Idaho employers’ rates increased 8% during that same time (2000-2013).

In addressing the water quality issue at the Summit, the Governor simply said he wants to do “what’s right for our state,” and it is “a big decision” that is “complicated” and “emotional” and that he “gets how important this is to our state.” The Governor’s vague observations do not offer much reassurance to an industry that has other states knocking on their doors.

Earlier this year Boeing gave the state yet another warning that a competitive business climate is the key to keeping aerospace jobs in Washington. Explaining the company’s decision to move more jobs to another state, Boeing said:

“Boeing has consistently said with regard to legislative matters that the state’s competitiveness is really something that needs addressing, and we see the four things [water quality regulations, workers’ comp reform, transportation improvements and STEM education] as not exclusive to that – there are certainly other issues that would come into play. But it really is all about the state improving its business climate as a nexus for aerospace and other high-tech business…the Boeing Co. is doing what it takes to be competitive.”

The message from Boeing and other Washington companies is crystal clear. They must adapt to competitive conditions in other states or risk losing aerospace jobs. Let’s hope the Governor gets how important these issues are to Boeing and the rest of our state’s businesses.